Legal access to personal finances when mental capacity is of concern – Part 1 Lasting Powers of Attorney

One of the more frequent questions I receive from clients is about how to access a family member's money when they are concerned that they no longer have mental capacity. In my experience often the first sign that a family becomes aware of a dementia related illness is through financial problems. Loved ones forget to pay the bills, obtain insurance for household items they don't own and get generally confused about things to do with finances.

There are two legal routes to follow where mental capacity is concerned. The most cost effective way is to put a Lasting Power of Attorney in place while you still have capacity. When capacity has been lost then the only route to access finances is through the Court of Protection, which I will cover in Part 2.

What is a Lasting Power of Attorney or LPA?

The most important thing to note about an LPA is that you must have mental capacity in order to obtain one. The person giving their power away is the Donor and they give their power to the Attorneys. You can have as many attorneys as you want and you can specify if they should act jointly at all or times or if you are happy for them to act independently. The "lasting" bit specifically refers to the fact that the power lasts beyond incapacity. So if the Donor either permanently or temporarily loses capacity then the LPA can be used.

There are two types of LPA:

Property and financial affairs (allowing an attorney to make decisions about paying bills, dealing with the bank, collecting benefits, selling your house, etc.)

Health and welfare (allowing decisions on treatment, care, medication, where you live, etc.)

Why would I need one?

A Power of Attorney allows you to choose someone to look after your money or your welfare if you lose the capacity to do this yourself.

When capacity is lost then it is too late to obtain an LPA. The only alternative is to submit an application to the Court of Protection which costs more and takes longer to obtain.

This won't happen to me.

With today's increasingly ageing population dementia related illnesses are on the increase. The current statistics from the Alzheimer's society forecast that over a million people will have dementia by 2021.

It's not just for the elderly! If as a result of an accident or a medical condition you suffer a brain injury then you may temporarily lose your capacity. Car accidents or Sports injuries resulting in concussion can be one way where anyone at any age can lose capacity.

Couples

Although many couples have jointly owned assets, in a lot of cases couples will still maintain separate bank accounts often for tax reasons such as to take advantage of ISAs . If all assets are joint and one partner suffers from a dementia related illness then in reality their partner can still access funds to pay the bills, buy food, fix the roof etc. However with separate funds it can sometimes lead to distressing situations where the bank will not allow you to access your partner's funds should they lose capacity. We have also been made aware of instances where banks have frozen joint accounts in certain circumstances.

The problems become more apparent when there is a single elderly parent or a widowed or divorced parent.

How do I get an LPA?

You can obtain an LPA by doing it yourself, but if you make a mistake then you may have to submit a further application with extra fees. It is worthwhile obtaining a fixed price quote from a Solicitor for the work so we can explain the risks and how to protect yourself, so that you fully understand what the process involves.

We have several people that can assist you here at McHale & Co but to get started please call and ask for Philippa Wright on 0161 928 3848 or email at philippa.wright@mchaleandco.co.uk